Daily Currency Update
The Kiwi dollar is weaker this morning when valued against the Greenback. The NZDUSD pair extends its downside and edged lower, below the 61 US cent mark, during the late session on Wednesday. The NZDUSD pair faces some pressure following the New Zealand employment data for Q2 and the headlines surrounding the US rating cut. The latest data from Statistics New Zealand revealed that the New Zealand Unemployment Rate for Q2 came in at 3.6%, above the consensus of 3.5% and 3.4% prior. Employment Change QoQ rose 1.0%, better than expected at 0.5% and 0.8% previously. Additionally, the Labour Cost Index QoQ declined to 1.1% versus 1.2% forecast and 0.9% prior. The participation rate in Q2 improved to 72.4%, against an estimation of 72.0%. Following the mixed New Zealand data released, the Kiwi faces some follow-through selling. Looking ahead this week in New Zealand and in the absence of top-tier economic data released from New Zealand later this week, market participants will shift their focus to the US ADP employment data due later in the day. Also, the US ISM Service PMI and Nonfarm Payrolls will be released on Thursday and Friday, respectively.
Key Movers
The US dollar strengthened overnight against its major counterparts after the release of US private payroll data showed a larger-than-expected expansion of the workforce in July. Data from the US’s largest payroll processor ADP showed an unexpected rise of 324K jobs in July versus the 189K predicted. The data reinforces the view that the US labour market is rock solid and inflation is likely to remain stubbornly high. The Federal Reserve is more likely to maintain interest rates higher for longer if more people are earning, and higher interest rates are positive for the US Dollar as they attract greater foreign capital inflows. The wages components of the ADP report were friendlier, with workers who stayed in their jobs seeing a 6.2% pay increase, the weakest since November 2021 and for those who changed jobs the median pay rise was 10.2%, the weakest in two years. Fitch downgraded the U.S. credit rating due to fiscal concerns, a deterioration in US governance, as well as political polarisation reflected partly by the Jan. 6 insurrection, Richard Francis, a senior director at Fitch Ratings, told Reuters on Wednesday. In a move that took investors by surprise, Fitch downgraded the United States to AA+ from AAA on Tuesday, citing fiscal deterioration over the next three years and repeated down-to-the-wire debt ceiling negotiations that threaten the government’s ability to pay its bills.
Expected Ranges
- NZD/USD: 0.5970 - 0.6170 ▼
- NZD/EUR: 0.5450 - 0.5650 ▼
- GBP/NZD: 2.0800 - 2.1000 ▲
- NZD/AUD: 1.0640 - 1.0840 ▼
- NZD/CAD: 0.8000 - 0.8200 ▼